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EJL7 - yep agreed on the points below. I focussed a little on the WACC as the backsolved DCF that computed the 300p TP in the Westhouse broker note didnt stand up. The main thing supporting the position here is SPRP's underlying strengh in its core offering and growth in regulation in Europe. I dont think either of these are going away in the near term. Have some cushion here, not as much as I initially wanted but will be taking my dividend when it comes and looking forward to discussing the RNS as they come in. GL
Thanks for response Earlsfield- I prefer the comparison to comps vs. WACC. Agreed difficult to find exact comps, but whichever ones you use, SPRP seems to compare favourably, as long as we expect some small company discount & illiquidity. As to WACC, I think that I see where you're going with this-but as stated before, I find it difficult to use properly in this situation. However, a WACC 0f 10-15% seems like a good estimate here. Anyway-hope you're in with some cushion in price in light of what I mentioned to Poetical below(Student-hope you got in also). I'll give some more thought as to valuation & offer what I can-maybe the other people will have some thoughts. GLA
My pleasure Poetical-your past posts have given me ideas so nice to reciprocate. Agree-be careful here. As i said think that short is forming or formed-going up on thin volume. Also very thin float-works for holders but you still need buyers to take it up further. See holdings below- http://www.sprueaegis.com/InvestorRelations.aspx And that's just significant holdings-nearly 65%-so very little left. And I still think that Jarden(thru BRK Brands) might still go after SPRP in the future-just not at this price. As for independent corroboration of company-they're just not covered. So think I'll check thru product reviews that's a start for me. Any thoughts on my questions to Earlsfield(see below)?
Morning. This is a bit of a tricky one (and you may regard my approach as somewhat high level / a swag). I am probably more comfortable with the broker’s as they are a little closer to the company. That they are lower is a little more comforting. I took a high level industry approach and also a NPV approach to assess where I thought value would break if the company was sold today. I had a scan for some decent comps, which are few are far between as SPRP is so small and niche compared to its bigger and more diversified rivals. The broker note uses Zyrtonic, Jarden and United Technologies, I had UT, Gentex and Tyco. Looking at forward P/Es for this set SPRP at 15.1x compares to 19.8x, 16.2x and 15.4x for TYC, UTX and GNTX respectively. Quite difficult I think to use a sector specifically on this one, so took what I thought were best comps I could find – each of these SIC codes are different. Used this to get a little more comfortable about the year 1 p/e.which I think it does – you could argue the toss about size discount and on the flipside growth rates etc. On the other hand, I had a look at the projections in the broker note, sensitised them a little and used a higher wacc and long term inflation growth rate. Didn’t calculate the wacc bottom up given unknowns and also my comfort level with the comparables. A 10% to 14% wacc on mid market companies as a rule of thumb is acceptable, took the higher of the range given the quite punchy growth profile of the company. Added into this, the company is dividend paying and should, given its forecast cash generation, continue to do so in the future. All this led me to conclude that the company was worth an investment at this juncture. Be interested to hear what you think about this approach…….
Thanks EJ for the nod here. looking at it purely on financials, it looks like a real quality stock with great momentum. It's also operating at an annual high and I'll need to look much further to ensure I'm buying I to a continued upward trend and not a peak, I'd appreciate your thoughts on this or whether there are any good resources other than the obvious to take a look at. Many thanks
Good morning-thanks for the post. I too am holding this longer term & based on fundamentals-agree with you-good story. As you can see by the 265,000 share trade this morning, looks like an institutional holding created. Stock seemed a bit tight. Thanks for figs.-was wondering why the EPS figs from Westfield are a bit lower than those quoted in the article from Shares Magazine-I had thought the author was repeating Westfield's estimates-maybe not. Which set of figs. are you more comfortable with? Any feeling about the SPRP p/e comparatively with the sector/and which sector would you use? Regarding WACC-not sure how to use it here nor as to how to check Westfield's assumptions-company has no debt nor does it seem like they will need in near future-so what equity return do shareholders require? We don't know dividend growth policy-so this could be difficult. Any thoughts?
That's huge! Do we know if it was a buy or sell? Director taking more shares potentially?
not 41.1 m
Hey. I just tend to focus on the fundamentals/financials. Not a trader, more a long term holder or sometimes opportunistic purchaser for shares that I track who look undervalued. I can't attach the Westhouse financials. But to summise: FY14 PBT 7.6m, EPS 15p, DPS 8p, P/E15.1x, EV/EBITDA 11.4x FY15 PBT 10.5m, EPS 20p, DPS 10p, P/E 11.3x, EV/EBITDA 8x. Fully diluted shares of 44.9 in FY14 and 41.1m in fY15 (new shares issued and options) Assumptions of DCF 12% WACC and terminal growth rate of 0 got to 300p price target. I think their wacc assumptions are a little wacky, would expect a slightly higher wacc and a growth rate in line with inflation. Working off a 14pc WACC and 2pc growth rate, which seems fairer, it gets us to about the same point which is comforting. So, I'm good here - will watch this one with interest
Earls et al.-looking at trades over last few days(altho I could be on treacherous ground here, as very tough to read)-seems like MMs have had enough sales & probably should have stock from placing. However, looking at sp, looks more like a short forming or maybe MMs collecting stock for a larger order? Any thoughts? Thanks-
this has good potential, good investor backing and solid distribution and contracts. am quite excited about this one
Just received email from John Gahan-Finance Director-reiterated 6p declared dividend to be paid in June(4p paid June, 2013) but no further info about future dividend policy. As to cash position, year end cash(2013) was £ 5.2mm and add a net £ 7.2mm from the recent placement to AIM. So dividend cover is comfortably above 4 times.
Dividend of 6p declared in final accounts for 2013-record date of 20 June. I've emailed the company to ask for further info about proposed dividend policy and an estimate of their present net cash position(to work out dividend coverage). Also the company is debt free.
Hi everyone-good to see a few people on the board. I've been invested in the company since about 2001 & have been pleased with the management & their progress since then. So here's a start-please chime in & let's get this board exchanging some ideas. I see that Westfield has reiterated their price target of 300p which is good although I can't find any more details of their research-if anyone can get a copy-please post. So-Shares Magazine-repeats Westhouse's pre-tax profit targets of £ 7.6mm for 2014 and £ 10.2mm for 2015-given this(I'd like to corroborate these targets elsewhere) with 45,270,000 shares in issue that makes eps for 2014(16.8p) and for 2015(23.4p) which gives us 2014 p/e of 13.6 and for 2015 p/e of 9.76. Not sure what sector to compare SPRP with-but Household Goods on main board average p/e of 18.5-so figure a discount from there-not sure how much. But think that SPRP figs compare favourably. Article- http://www.sharesmagazine.co.uk/articles/sprue-triggers-aim-game#.U3eBX8ZYauc Also want to mention that extension of BRK deal looks good for both sides(remember BRK bid of 90p last May(that was cheap!)-they both seem quite satisfied with the situation, as BRK still holds about 27% of the company. See this- http://bestinvest.uk-wire.com/Index.aspx?searchtype=3&words=SPRP Add to this the new distribution agreements in Germany and France, expansion in North America and rollout of new miniature CO sensors-we have a lot to look forward to. BTW-I have their CO sensors, smoke alarms, & travelling CO sensors-happy customer GLA
New Broker target looks like great!
I have been invested here since the IPO many years ago - forgot all about them until I started receiving dividend cheques. A great and innovative company with sufficient belief in its products and it's business model to fight off a potential takeover at a fraction of today's price. I just hope SPRP does not come to regret entering the muddy and tainted waters that is AIM.
some massive sells here today! Such a great company with so much more potential in France & the rest of Europe!
A strong entry into AIM. A profitable company geared for growth.
Positive jump from ISDX...